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supermarkets had held their discounts to a few yen per can. But this time, it appeared certain that a large-scale price reduction of a minimum of ten yen ranging up to twenty yen was about to happen. Although he could hear the two men’s conversation, there was no way for Shiroyama to respond to it offhandedly, so he chose to ignore it and instead turned his gaze to the beautiful undulating green before him.

Shiroyama was fond of the Matsuo golf course, with its thick groves of Japanese cedars and the fairways that seemed to ripple out from beneath them, each of which were always serenely quiet. No matter where he was on the course, he could look upward and see only the cedar trees rising to the sky above. As he made his way around each of the eighteen holes, he drove the ball into the air from this deep green expanse devoid of anything superfluous. The ball then dropped back down onto the green carpet, and he launched it up again. Prizing the tranquility of these hours, Shiroyama still came here to chase the ball around, but in his four years at the top of a company that sold a trillion and three hundred billion yen worth of beer, the truth was that there had barely been a moment to take a deep breath amidst this sea of green.

During Shiroyama’s thirty-five years of service to the beer industry, things had never been as severe on so many different fronts as they were now. Due in part to last year’s cool summer, the year-over-year aggregate demand for beer had fallen into the negative for the first time in nine years, and last year’s decrease in demand was further confirmation of a declining trend in average spending per customer in the midst of three years of stagnation resulting from the collapse of the bubble economy, as well as of signs that alcohol consumption itself was leveling off.

Meanwhile, if he considered the arena of production, distribution, and sales of alcoholic beverages, first of all, the diversification of sales channels of alcoholic beverages had accelerated considerably as a result of partial revisions in 1989 and 1993 of the guidelines for obtaining a liquor license, and deregulation under the Large-Scale Retail Store Act. The market expansion of discount liquor stores gained even more traction, and now that conditions were increasingly favorable for convenience stores and major supermarkets to venture further into the alcoholic beverage business, the competition within various channels to drive prices down had turned fierce—this was directly connected with the all-around decrease in sales at liquor stores in general—and the entire keiretsu-based conglomerate structure of primary wholesalers, secondary wholesalers, and chain liquor stores that the beer industry had established over its hundred-year history was at this moment in time shaking from its very foundation.

There was a sector of liquor stores that had adopted the strategy of franchising or converting into convenience stores in order to survive, but small-scale retail stops that couldn’t afford such options were no longer able to keep business going. The wholesalers, in turn, were also suffering from an undeniable drop in sales due to the undercutting on unit price and the slump in consumption. For liquor stores and wholesalers both, even if they were to streamline their businesses to counter the narrowing profit margin, the current keiretsu system was nothing but an impediment to cost-trimming strategies, such as bulk purchasing and refining the product line with strong sellers, and it only exacerbated the management inefficiency. On the other hand, within the wholesale industry where family-run businesses were common, measures to strengthen management infrastructure and improve their competitive edge, such as mergers among small to mid-size wholesalers or absorption by larger wholesalers, were not the kind of thing that could happen overnight.

Separately, instead of focusing on domestic beers, with their high liquor tax that never turned a profit no matter how many units they sold, convenience stores and large supermarkets were beginning to engage in direct sales by partnering with foreign beer manufacturers to develop their own in-house brands or forming exclusive distributor agreements. As of May 1st, a 350-milliliter can of domestic beer would cost 225 yen. Meanwhile, an imported brand sold directly by a certain convenience store cost 180 yen. Such direct transactions between major mass retailers and foreign manufacturers had resulted in beer price-busting and diversification of sales channels. Moreover, foreign products that benefited overwhelmingly from tax rates and raw material costs had been streaming into the country. What these situations suggested—as far as domestic beer manufacturers were concerned—was a future for the beer industry that promised to chip away at Japan’s hundred-year-old sales and distribution system and ensured a decline in sales for Hinode, the company that had dominated such a system.

Every manufacturer nowadays was being forced into reforming their business structurally, but complex problems—such as reassessing the distributor network, including the rebate system; restructuring wholesalers; restructuring and cutbacks with small-scale liquor stores; reevaluating the immense publicity and advertising costs shouldered by the manufacturers, as well as the labor costs of maintaining their regional sales network; and restructuring the land transportation industry in order to streamline distribution channels, for both manufacturers and for distribution and sales at every level—these could all only be realized five or even ten years from now.

Nevertheless, the fact was that, in just a week, when the shelves of liquor shops and vending machines were lined with 225-yen cans of beer, at the same time discount stores, convenience stores, and major supermarkets would be stocked with imported beers and their own label beers for less than two hundred yen. The price difference for a case of twenty-four beers could amount to nearly a thousand yen. For Hinode this meant that, a week from now, the brunt of this impact would be felt by the six hundred dealerships and the 130,000 general liquor stores around the nation. Over the last half year, Shiroyama himself had taken the lead, wearing out his shoes

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